With an adjustable rate mortgage, the interest rate changes annually based on market fluctuations. With a traditional fixed rate mortgage, the interest rate stays the same for the life of the loan.
When will my rate change?
Adjustable rate mortgage rates are generally lower than fixed rate mortgages initially, and may stay at a particular rate for the first three, five or more years of the loan, according to the mortgage terms. After that, if interest rates trend lower, your monthly payment is less for that year, but if they trend higher, you pay more.